Retired Lawyer Wins Big

Paul S. Davis of East Lansing, Mich., spent a career as a federal lawyer and judge, but his biggest thrill as a lawyer came after he retired.

Davis, representing himself, argued for 15 minutes before the U.S. Supreme Court. It was his first appearance before the high court.

On March 28, he learned that he had won.

The victory, coming five years after he filed the lawsuit against the state of Michigan, not only was sweet for him, but it may result in income-tax breaks for retired federal employees in at least 14 states, including Virginia.

The Supreme Court agreed with Davis that Michigan was wrong to tax federal pensions while exempting those of state and local government employees.

The Virginia General Assembly will meet in a special session later this month to decide how to respond to the court ruling.

For his five-year battle, Davis was awarded nearly $4,300 in back taxes.

The award didn't come close to compensating him for the countless hours he spent on the case.

It's the principle that counts most.

"I'm quite pleased," he said Monday.

Retired in 1980 after serving as a Securities and Exchange Commission lawyer and an administrative judge, Davis began thinking about the pension tax inequity in Michigan when a similar question regarding banks was decided in 1983, he recalled.

"It was a Tennessee law that exempted the banks' state obligations but taxed their federal obligations," he said.

Michigan, which had a law virtually the same as Tennessee's, ended up refunding about $30 million that banks had paid in state taxes.

"I read about this and thought I'd try it on the pension taxes," he said. After some research, he filed his lawsuit the following year.

The case dragged through the Michigan courts until his suit was turned down by the state's high court.

Davis decided to take it all the way to the top, an appeal to the U.S. Supreme Court.

He credits assistance from the U.S. Solicitor General's office, which assigned an assistant solicitor to help him argue the case.

Also helping was Michael Kator, a Washington lawyer who represented the National Association of Retired Federal Employees, which joined the action as a "friend of the court."

Kator did not participate in the oral arguments, but he was impressed with Davis' performance.